Home Mortgage Crisis - Who is the Bad Guy

No relief has been offered to the millions of home owners facing eviction. 

There is a smug self-rightousness in America that says they should not have bought a house they couldn't affort. These homeowners that can't now pay their mortgages have become the bad guys to many.  Think again.

Imagine being offered the chance to own a home --- something you never thought possibe.   A place for you and your family.  Sign the dotted-line.  Can you pay this much a month.  Sure no problem.  Of course, this is the wrong question.  The real question is, can you afford this new payment in a year when your ARM mortgage goes from x % to 2X or 3C % rate.  Oh yea, please read the fine print.  Besides, in a few years when things change, life will be better, your job will be better, so don't worry about it.

Who was the bad guy.  The person wanting to buy a home for his family ... the guy trying to live the American dream, or the one that gave him the false hope.

One of the biggest challenges in helping those in trouble with their mortgage is the belief by many Americans that they do no deserve any help. Well guess what.  They should have been smarter, they should not have let their dreams cloud their vision.  But, now helping them helps save America, not helping them lets America keep sliding down the tube.  And, who would you rather help, the Executives at the bank that take the government handouts and then give themselves a bonus, or the common man trying to stay in house and keep his life together?

To me the only question remaining is this ... can Congress make a package to save these mortgage holders that is simple enough to work?  Keep it simple.  If you have a mortgage that is valued higher than the estimated value of your home, you qualify.  If you qualify, you get a 3% loan on the estimated value of your home (from 3 estimators).  That's all.  It has to be that simple to work.

Or we can keep watching the water spin out of the tub.

Israell: Responsibility of the Powerful

With power comes responsibility.   The power in this case is over life and death.  The ultimate power.  And Israel has it.   The people in Gaza are prisoners of Israel, and as such, Israel has a responsibility to care for their well being.

I watched on the news tonight young children holding on to their moms four days after their parents were killed by the Israel military.  And who does Israel think is responsible. Israel's official statement is that Hamas is hiding among the public.  So what.  Hamas is relatively powerless.  Their rockets don't work, they kill almost no one. They are, however, elected leaders of Gaza. 

700 people have been killed by the powerful.  UN relief efforts has been suspended after Israel killed a driver. The political pressure is growing on Israel to stop, although their military wants to destroy Hamas's ability to launch missles.  Of course, to guarantee this, Israel must continue to claim down on the blockade, keeping the Palestinians prisoners indefinitely.  So, what is the long term game plan of Israel.  It appears they do not have one.  They have created a nightmare with no end game.  It is illilogical and borders on being stupid.  No, it is stupid.  It is also inhumane for the powerful to be so calouse and stupid.

Now for the rest of the Muslims.  Saudi Arabia could end this rampage in one day.  Simple.  Shut off the pumps.  Pay the price, shut down the world, or at least, severely cripple it.  Of course, despite the fact that they hate the killing of Muslims, they don't hate it enough to act.  Yea, I understand all, or at least most, of the technical challenges.  Yes it is expensive and would require a huge sacrifice on many fronts.  And even worse, Saudi would release their real power over the world.  But, that kind of courage doesn't happen often, by anyone.

So, those with the power over Israel, the U.S. and Saudi won't act.  Israel will not accept its role as the powerful, the controller of life and death.  So, we all just sit and watch as humans kill humans and other humans provoke the powerful until they die.  It is good we are the most intelligent species on the planet.  Think how we would act if we were stupid.  My guess is not much different than we are all acting now.

Energy Scarcity the New Driver in the World Economies

The last couple of years have been colder than most global warming fans have liked.  My opinion is that the verdict is not in yet -- is the CO2 in the atmosphere rising because the temperature is rising as part of the normal cycle (ice age, thaw, etc.) or is the plant warming because of excess "CO2 gases" in the atmosphere.  But, the details of this discussion are not the point of this discussion.

While I agree that the science behind global warming may be suspect, I believe that our dependence on foreign oil needs to be reduced, nevertheless.   I am one of the those people that believe in the peak oil theory --- that we have reached the maximum oil production for both for technical and political reasons while the demand continues to grow.   China in five years or so will be sucking as much oil as we do.  Our economy falling on its face has just provided a brief reprieve from this "upper limit" on oil production.  (As a corrosion engineer for the oil industry, I see the oil composition on future deposits (five years out), and it is not pretty.  There is a biased look at the International Energy Agency (IEA) report below. The IEA report is more science fiction than the global warming theory by the way. )

I was in Oman this year and witnessed first hand some of the wealth transfer that is occurring from the entire world to the middle east.   Awesome and scary.  Nothing good I am afraid will come of this wealth transfer.

And it is not just oil.  There is a global shortage of energy.  In our technology dominated world, we can do almost anything, except peace, with enough energy.  Grow food, move mountains, build sky scrappers.  But, for the rest of human history, energy is going to be increasingly scarce and expensive.  It is going to limit development in the foreseeable future -- certainly for the rest of my life time.   Back to oil which is on stage now.

I firmly believe oil prices will go through the roof again ($200/barrel) toward the end of 2009.  By 2010 "peak oil" will bump into (1) the declining value of our dollar, (2) projects delayed by the current shortage of demand for oil, and (3) a rebounding U.S. economy to produce what will be called a world-wide shortage of oil and energy.  Short of a new war, ENERGY may finally get the attention it deserves.

If sanity prevailed we would see an increased use of electricity versus other forms of energy and increased production of electricity from coal, natural gas, nuclear, and wind energy.   However, sanity will not prevail in the short-run and instead we will see only significant investment in natural gas (supplemented by LNG) and wind power.  Solar will increase also, but we will struggle to supply 5% of  our needs in my lifetime. On the flip side, there is plenty of room for more energy efficient in air conditioning, building design and for more efficient autos.

 I look at all of this reaction to global warming as a move in generally the right direction for the wrong reasons.  There are some more fundamental problems in our world economy that we are not addressing.  The American Consumer has been the driving force in the world economy for the last forty years.  However, the American Consumer is also the American Worker.  His cut of the pie on both a national and international basis has been declining ... and in the last ten years it has been declining substantially.  Availability of excessive credit allowed the American Consumer to spend more than the American Worker made for over a decade, but that party is almost over.  Improved education of our people can possibly stabilize the decline in the fortunes of the American Worker on the long haul, but another driver for the world economy needs to emerge in the short and intermediate term (0 to 10 years).  Dealing with the upcoming energy shortage could be the driver for the world economy, perhaps, but that seems a little like trying to apply a force with a wet noodle.  Instead, they are parallel problems with solutions needed for both.

Some argue that the Chinese, or Indian, or South American consumer will become the drivers for the world economy.  The current public opinion is that the government is going to be the "driver" in the short term -- now that is a scary thought that I won't go into at the moment.  But, this way of thinking is based on an old model of how the world's economies work.  I am not sure how all of this going to unfold, but whichever countries most sucessfully deal with rising energy requirements as traditional supplies shrink will own this century.  Yes, it is that big.  The consumer dependent model where everyone tries to convince the consumer that he needs what they are selling is near the end.  The new model will address obtaining energy and using it efficiently.  The retail industry will be hit soon and hard by this new reality.  Engineering services, both on the industrial and even for homeowners, should flurish as this new reality emerges. 

This entry is more to introduce the concept than claiming I have it all figured out yet.  Writing is my way of sorting through this messy subject.  Any comments to add clarity to my mind would be appreciated.